Conference Agenda

This paper analyzes a unique micro-dataset capturing the ownership of about 800,000 properties in Dubai. We use this dataset to document patterns in cross-border real estate investments, a blind spot in the analysis of financial globalization. We obtain four main findings. First, offshore real estate in Dubai is large: at least $146 billion in foreign wealth is invested in the Dubai property market. Second, geographical proximity and historic ties are key determinants of foreign investments in Dubai. Third, a number of conflict-ridden countries and autocracies have large holdings in Dubai. This suggests that the official net foreign asset position of a number of low- income economies is significantly under-estimated. Last, we find that the probability to own offshore real estate rises with wealth, including within the very top of the wealth distribution. About 70% of Dubai properties owned by Norwegian taxpayers were not reported for tax purposes in 2019.

The real estate market has been reported to be particularly vulnerable to money laundering schemes as land and house purchases require large sums of money while being subject to fewer regulatory and reporting requirements. This study aims to shed some light on the empirical link between illicit financial flows and real estate rents using unique city-level data in Europe collected through the web portal Numbeo.com. Given the richness of the data, we use a triple interaction term that declares a supposedly more luxurious dwelling as the treated subset among the all dwellings. In addition, we add a set of conditioning variables that characterise cities that are hypothesised to attract higher volumes of illicit financial inflows. Our measure of illicit financial flows is based on the concept of 'abnormal FDI' by Dellate et al. (2022) which largely reflects the volume of unexplained capital channeled through tax havens.

Residency by Investment programs have become integral to contemporary migration policies, providing a pathway for individuals to acquire a new legal status. In this paper, we study the extent to which golden visas impact and distort housing markets. Using the population of transactions records from 2007 to 2019, we analyse the introduction of the Golden Visa program in Portugal. We first present descriptive bunching evidence around the 500,000€ threshold, revealing potential price distortions. Merging the transaction data to property tax records, we conduct a difference-in-differences analysis assessing the program impact on the discrepancy between transaction prices and fiscal values. This analysis uncovers a “Golden Visa Premium,” where transaction prices exceed fiscal values by an average of around 45,000 euros, indicating more than10% price increase in high-end housing prices. Finally, survey data from the Portuguese population highlights widespread support for ending the program.

Taxable transactions may be misreported to evade taxes and hide illicit wealth. Tax authorities must therefore set policy governing both tax rates and enforcement. We develop a model of optimal taxation and enforcement in which policymakers seek both welfare maximization and “tax accuracy,” wherein taxpayers remit the amount that they statutorally owe under truthful reporting; we characterize the optimal combination of tax rate and enforcement stringency in this setting. We apply this framework to the Mumbai real-estate market, a setting with widespread misreporting and a transparent enforcement instrument: government-specified guidance values act as a minimum required tax base.